Unauthorised sale leaves Regal reeling

Frank Timis, the ousted founder and chief executive of Regal Petroleum, agreed to sell the oil and gas explorer's gas field in Ukraine without telling his fellow directors, it emerged yesterday.

The news is the latest setback for the Alternative Investment Market-listed company that has seen the shares collapse after it announced last month that it had failed to find commercial oil on its other key field in Greece.

Regal announced yesterday that it "was notified by solicitors acting for Peak Resources Limited of Hong Kong of the existence of a call option agreement dated May 4 2005 purported to be made between the company and Peak Resources.

"The remainder of the board was not previously aware of the existence of the agreement and had not authorised or approved the entering into of the agreement with Peak Resources."

The call option gives Peak the right to buy a subsidiary called Regal Petroleum (Jersey) on or before August 31. The business owns Regal's production licence in Ukraine.

The agreement states that Peak wants to pay Regal $1.50 a barrel for the gas field, which three years ago was estimated by consultants to have 193m barrels of oil equivalent.

The field is being re-evaluated by another consultant Ryder Scott.

However, if the 193m figure is confirmed, it could mean that Peak would pay Regal $290m for the field, stripping the company of its major hydrocarbon asset in the process.

Regal said that it was now trying to find out who is behind Peak. It continued: "The board is currently investigating the circumstances surrounding the agreement and is seeking legal and other advice in respect of the company's position." A spokesman added: " We don't want to sell at this price."

Mr Timis was unavailable for comment yesterday.

Regal's shares, which were trading at 255p before the problems emerged on the Kallirachi-2 well in Greece five weeks ago, closed down 3.5 at 89p.

Tony Alves, an analyst at KBC Peel Hunt, said: "You have got to wonder whether it will be legally binding. It seems bizarre. The other question is 'who is Peak Resources'?"